Debate swirls over city Wi-Fi networks

In the latest evidence that the Wi-Fi revolution is taking root fast, EarthLink on Tuesday won the right to construct and manage a wireless Internet network for Philadelphia.

While the city is the largest so far to jump into the Wi-Fi game, dozens of major markets across the USA are considering building their own networks.

The race to embrace Wi-Fi is attracting a crush of non-traditional telecom rivals. EarthLink, an Internet service provider with 5.4 million customers, and Web giant Google are in a heated competition to hook up San Francisco with Wi-Fi. The city is considering other proposals, as well.

Google has proposed giving away the service for free in San Francisco. EarthLink, which beat out tech giant Hewlett-Packard to win Philadelphia, plans to charge $20 a month, though the service will be free in some public areas, including parks.

Cities share a common goal: to provide free or low-cost Internet access for local residents. They are particularly concerned about deploying affordable broadband in poorer neighborhoods.

Cable and phone companies, which are spending billions to build broadband networks, generally have opposed city-backed Wi-Fi networks, particularly if they are financed with public funding. Incumbents say such subsidies give cities and their preferred vendors an unfair competitive advantage.

Donald Berryman, president of EarthLink's municipal networks unit, says his company's winning bid knocks the wind out of that argument. EarthLink plans to cover the cost of the Philadelphia network - estimated at $10 million to $15 million for the 135-square-mile area - out of its own pocket. Any cost overruns will be shouldered by EarthLink, which will manage the network. The beauty of the plan, Berryman says, is the city doesn't have any financial risk.

Philadelphia will provide marketing support, Berryman noted. The latter could wind up taking many forms, including ad space on city buses.

Comcast, the No. 1 cable TV operator, said it is "inappropriate" to "indirectly subsidize select providers."

EarthLink estimates it'll have the Philadelphia network completed by fourth quarter 2006 and recoup its investment within two years.

Paul Glenchur, an analyst at Washington Research Group, says it remains to be seen if the crush of new Wi-Fi entrants, including Google, can deliver on their many promises. "It's all fascinating in theory," he says. "But once you get boots on the ground, you start finding a lot of unanticipated complexities in doing this."

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